Decree No. 188/2004/ND-CP on Methods for Determining Land Prices and Price Ranges for Various Types of Land

DECREE

On the method for determining land prices and price ranges for various types of land

THE GOVERNMENT

Pursuant to the Law on Government Organization dated December 25, 2001;

Pursuant to the Land Law No. 13/2003/QH11 dated November 26, 2003;

Pursuant to the Price Ordinance No. 40/2002/PL-UBTVQH dated April 26, 2002;

At the proposal of the Minister of Finance,

DECREE

PART I

GENERAL PROVISIONS

Article 1. Scope of application

This Decree stipulates the methods for determining land prices, price ranges for various types of land, and the valuation of specific types of land at local levels.

Article 2. Scope of Application

1. The land price determined by the People's Committees of provinces and centrally-administered cities (hereinafter referred to as provincial People's Committee) according to this Decree shall be used as the basis for:

a) Calculating taxes on land use and transfer of land use rights in accordance with the provisions of the law;

b) Calculating land payment and land lease fees when allocating land or leasing land without public auction of land use rights or bidding for projects using land as provided for in Article 34 and Article 35 of the Land Law 2003;

c) Calculating the value of land use rights when allocating land without land payment to organizations and individuals as provided for in Article 33 of the Land Law 2003;

d) Determining the value of land use rights to be included in the asset value of state-owned enterprises during the process of shareholding, choosing the form of allocating land with land payment as provided for in Clause 3, Article 59 of the Land Law 2003;

e) Calculating the value of land use rights to collect stamp duty on the transfer of land use rights as provided for by the law;

f) Calculating the value of land use rights for compensation when the State recovers land for national defense, security, national interests, public interest, and economic development as provided for in Article 39 and Article 40 of the Land Law 2003;

g) Calculating compensation for persons who violate laws on land and cause damage to the State as provided for by the law.

2. In cases where the State allocates land or leases land through public auction of land use rights or bidding for projects using land, the winning bid price for land use rights or project bids must not be lower than the price determined by the provincial People's Committee as stipulated in this Decree.

3. This Decree does not apply to cases where the land users agree on land prices when transferring, leasing, subleasing land use rights, or contributing land use rights as capital.

Article 3. Definitions

In this Decree, the following terms are understood as follows:

1. Zoning land in rural areas is the division of land fund comprising various types of land within regions having similar land conditions, soil, and climate. Based on this, land types in the region such as plains, midlands, mountainous areas are divided for valuation purposes.

2. Actual market transfer price of land use rights under normal conditions is the amount of VND calculated per unit area of land formed from the results of actual transactions between willing sellers and buyers, unaffected by factors such as speculative price increases, changes in planning, forced transfers, or kinship relations.

3. Land in border areas between provinces and centrally-administered cities is the land adjacent along administrative boundary lines between provinces and centrally-administered cities.

4. Adjacent land is the contiguous land area that connects to the already defined land area.

Chapter II

METHODS FOR DETERMINING LAND PRICES AND PRICE RANGES FOR VARIOUS TYPES OF LAND

Article 4. Method for determining land prices

1. Direct comparison method: is the method of determining the price level through analyzing actual land prices of similar types of land (in terms of land type, land area, plot, grade, urban type, street type, and location) on the market to compare and determine the price of the plot or type of land to be valued.

2. Income method: is the method of determining the price level by calculating the ratio between the net annual income obtained per unit area of land and the average annual savings deposit interest rate (as of the date of determining the land price) of VND deposits with a term of 01 year (12 months) at the State Commercial Bank with the highest savings deposit interest rate in the locality.

Article 5. Conditions for applying methods to determine land prices

1. The direct comparison method shall be applied to assess the value of land when there are similar types of land on the market that have been transferred rights to use land, which can be compared with the type of land to be assessed.

The transfer price of rights to use land for similar types of land used for analysis and comparison with the type of land to be assessed must be the actual transfer price of rights to use land on the market under normal conditions.

2. The income method shall only be applied to assess the value of lands from which revenues can be determined.

3. Based on specific circumstances regarding the market for transferring rights to use land, files on various types of land, and collected data, the People's Committee of the province shall select appropriate methods to determine prices; if necessary, both methods for determining land prices stipulated in this Decree may be combined to check, compare, and cross-reference estimated price levels to decide on specific price levels.

4. When assessing specific types of land in localities, if some types of land do not meet the conditions for applying the methods to determine land prices as specified in Article 4, the provisions at point 6, point 7 sub-item a clause 1; point 5, point 6 sub-item b clause 1 and sub-item c clause 1 of Article 6 of this Decree shall be applied to assess the value.

Article 6. Land Price Framework

1. The land price framework issued together with this Decree applies to the types of land classified in Article 13 of the Land Law, including:

a) For agricultural land groups:

- Framework for land prices for annual crop cultivation (Table 1).

- Framework for land prices for perennial crop cultivation (Table 2).

- Framework for land prices for production forests (Table 3).

- Framework for land prices for aquaculture (Table 4).

- Framework for land prices for salt production (Table 5).

- For protective forest land and special-use forest land, the People's Committee of the province shall base on the production forest land price decided by the People's Committee of the province and the valuation method for production forest land prescribed in Article 13 of this Decree to set appropriate price levels according to the actual situation in the locality.

- For other types of agricultural land as prescribed by the Government, the People's Committee of the province shall base on the prices of adjacent agricultural land decided by the People's Committee of the province and the valuation method for adjacent agricultural land prescribed in Article 13 of this Decree to set appropriate price levels according to the actual situation in the locality.

b) For non-agricultural land groups:

- Framework for residential land prices in rural areas (Table 6).

- Framework for residential land prices in urban areas (Table 7).

- Framework for non-agricultural production and business land prices in rural areas (Table 8).

- Framework for non-agricultural production and business land prices in urban areas (Table 9).

- For land for constructing office premises and land for construction of public works, the People's Committee of the province shall base on the prices of adjacent residential land or residential land in nearby areas decided by the People's Committee of the province and the valuation method for residential land prescribed in Article 13 of this Decree to set appropriate land prices according to the actual situation in the locality.

- For land used for national defense and security purposes; land used for public purposes as prescribed by the Government; land used by religious establishments; land with shrines, temples, pagodas, hermitages, ancestral halls, churches; land for cemeteries and other non-agricultural land as prescribed by the Government; the People's Committee of the province shall base on the prices of adjacent land types prescribed by the People's Committee of the province and the valuation method for adjacent land types prescribed in Article 13 of this Decree to set appropriate land prices according to the actual situation in the locality.

c) For unused land

For types of land whose usage purpose has not been determined, including flat unused land, mountainous unused land, bare rock mountains without trees, when it is necessary to have a price for compensation for persons who violate the law concerning this type of land, the People's Committee of the province shall base on the prices of adjacent land types prescribed by the People's Committee of the province and the valuation method for adjacent land types prescribed in Article 13 of this Decree to set appropriate land prices. When unused land is permitted by competent authorities to be put into use, the People's Committee of the province shall base on the land price framework for the same type and usage purpose prescribed by the Government to set specific land prices.

2. Based on the actual transfer prices of rights to use land in the locality, the People's Committee of the province may decide specific land prices within the allowable range of not more than 20% above the maximum level and not less than 20% below the minimum level of the land price framework for the same type as stipulated in Clause 1 of this Article.

Article 7. Adjusting the land price framework for various types of land

When the transfer prices of land use rights for some or all types of land listed in the land price tables show continuous fluctuations lasting 60 days or more, over a wide range (multiple provinces and cities), causing significant price discrepancies: increasing by 30% or more compared to the maximum price or decreasing by 30% or more compared to the minimum price specified in Clause 1, Article 6 of this Decree, the Ministry of Finance shall be responsible for leading the construction of new land price frameworks for some or all types of land to be submitted to the Government for appropriate adjustments.

Chapter III

VALUATION OF VARIOUS TYPES OF LAND AT LOCAL LEVELS

Article 8. Principles for zoning rural land and classifying agricultural land for valuation purposes

1. Zoning of land

Land is divided into three regions: plains, midlands, and mountainous areas, each with the following basic characteristics:

a) Plains are lowland areas that are relatively flat and at sea level. The population density is high, and infrastructure and conditions for production and circulation of goods are more favorable than in midland and mountainous areas.

b) Midland areas have moderate elevation (lower than mountainous areas but higher than plains), mainly consisting of hills. Population density is lower than plains but higher than mountainous areas, and infrastructure and conditions for production and circulation of goods are less favorable than plains but better than mountainous areas.

c) Mountainous areas are higher than midland areas, mainly consisting of high mountains with complex terrain. Population density is low, and infrastructure and conditions for production and circulation of goods are less favorable than midland areas.

Communes recognized as mountainous areas according to the regulations of the Committee for Ethnic Minorities and Mountainous Areas (now the Committee for Ethnic Minorities).

2. Classification of land

The classification of land for valuation purposes follows the classification of agricultural land for tax purposes approved by the competent authority in accordance with current state regulations.

Article 9. Determining the region, classification, and location of specific types of land in rural areas for valuation purposes

1. Agricultural land group

a) For annual crop land, perennial crop land, aquaculture land, production forest land, protective forest land, special-use forest land, and other types of agricultural land, they are classified based on their category and divided into three types of communes according to administrative boundaries: plains, midland, and mountainous areas.

b) For salt-making land, it is classified based on its location. The location of salt-making land is determined based on the distance from the salt pond to the centralized salt storage facility at the production site or near the transportation route, following the principle: location number 1 applies to the salt pond closest to the salt storage facility or nearest to the transportation route; subsequent locations follow in order from number 2 onwards, with greater distances from the salt storage facility and transportation route.

2. Non-agricultural land group in rural areas

For residential land in rural areas, non-agricultural production and business land in rural areas, and other types of non-agricultural land such as land for building agency headquarters, public works; land used for national defense and security purposes; land used for public purposes including transportation and irrigation land; land for constructing cultural, health, educational, and training facilities, sports and physical education facilities serving public interests; land with historical and cultural relics, scenic spots; land for constructing other public facilities as prescribed by the Government; land used by religious institutions; land with shrines, temples, pagodas, hermitages, ancestral halls, family churches; land for cemeteries, graveyards, and other types of non-agricultural land as prescribed by the Government, they are classified based on their location and divided into three types of communes according to administrative boundaries: plains, midland, and mountainous areas for valuation purposes.

The location of each type of land within each commune is divided into three zones within the administrative boundary of the commune:

- Zone 1: land facing the main transportation road located in the center of the commune or cluster of communes (near the People's Committee, schools, markets, health stations); close to commercial and service areas, tourist areas, industrial zones, export processing zones; or not located in the central area of the commune but close to transportation hubs or rural markets.

- Zone 2: located along village-to-village roads, adjacent to the central area of the commune, cluster of communes, commercial and service areas, tourist areas, export processing zones.

- Zone 3: remaining positions within the commune.

The classification of zones to determine land prices is carried out according to the principle: Zone 1 has the highest potential for profit and the most favorable infrastructure conditions; Zone 2 and Zone 3 have lower potential for profit and less favorable infrastructure conditions.

The location of each type of land within each zone is determined based on profitability, distance to the frontage of main transportation roads, and infrastructure conditions favorable for living, business, and service provision, following the principle: location number 1 has the highest profitability and most favorable infrastructure conditions, closest to the main transportation road; subsequent locations follow in order from number 2 onwards, with lower profitability and less favorable infrastructure conditions.

Article 10. Classifying urban areas, streets, and land positions within urban areas for specific types of land for valuation purposes

For residential land in urban areas, non-agricultural production and business land, and other types of non-agricultural land in urban areas such as land for building agency headquarters, public works; land used for national defense and security purposes; land used for public purposes including transportation and irrigation land; land for constructing cultural, health, educational, and training facilities, sports and physical education facilities serving public interests; land with historical and cultural relics, scenic spots; land for constructing other public facilities as prescribed by the Government; land used by religious institutions; land with shrines, temples, pagodas, hermitages, ancestral halls, family churches; land for cemeteries, graveyards, and other types of non-agricultural land as prescribed by the Government, they are classified based on the type of urban area, street type, and land position for valuation purposes.

1. Urban areas include cities, towns, and townships established and classified by authorized state agencies. Urban areas are divided into six categories: special-class urban areas, Class I urban areas, Class II urban areas, Class III urban areas, Class IV urban areas, and Class V urban areas, as stipulated by current state regulations.

For towns and wards that have not yet been classified as urban areas, they shall be classified as urban area type V.

2. Classification of streets

The classification of streets within each type of urban area is primarily based on their profitability potential, infrastructure conditions conducive to living, production, business, services, tourism, and distance from the city center, commercial centers, service centers, and tourist centers.

Streets within each type of urban area are divided into street types numbered from 1 onwards. Street type 1 applies to land in the city center, commercial centers, service centers, and tourist centers; it has the highest profitability and the most favorable infrastructure conditions. Subsequent street types, numbered from 2 onwards, apply to non-central lands with lower profitability and less favorable infrastructure conditions.

In cases where a street consists of multiple sections with different profitability potentials and infrastructure conditions, each section is classified according to its corresponding street type.

3. Position of land within each street type in each urban area is determined based on profitability potential, infrastructure conditions conducive to living, production, business, services, and distance from main traffic routes. Positions of land within each street type in each urban area are divided into position types numbered from 1 onwards. Position number 1 applies to land adjacent to the street (frontage) with the highest profitability and the most favorable infrastructure conditions; subsequent positions, numbered from 2 onwards, apply to non-adjacent lands with lower profitability and less favorable infrastructure conditions.

Article 11. Authority for zoning, grading land, classifying streets, and determining land positions for valuation purposes

Based on the general provisions of Article 8, Article 9, and Article 10 of this Decree, and considering the actual situation and customs of each locality, the People's Committee of the province shall specify criteria and regulations for zoning, classification, and determination of the number of positions for each type of land; the number of street types and the number of land positions for each street type corresponding to urban areas in the locality as a basis for valuation.

Annually, the People's Committee of the province must adjust the classification of land, street types, and land positions when changes due to planning, investment upgrades, or new construction of infrastructure alter the previously classified land types, grades, street types, and land positions.

Article 12. Border land areas

1. Border land areas between provinces and centrally-administered cities.

a) For agricultural land in border areas, it is defined from the administrative boundary line between provinces into each province's territory a minimum of 500 meters.

b) For non-agricultural land in rural areas in border areas, it is defined from the administrative boundary line between provinces into each province's territory a minimum of 300 meters.

c) For non-agricultural land in urban areas belonging to the same urban type, the border land area is defined from the administrative boundary line between provinces into each province's territory a minimum of 200 meters.

d) In cases where the land area between provinces is separated by rivers, lakes, canals with a width of up to 100 meters, the border land area is defined from the riverbank, lake shore, canal bank of each side of the river, lake, canal into each province's territory according to points a, b, and c of this clause. If the width of the river, lake, or canal exceeds 100 meters, it will not be classified as border land.

2. Border land areas between districts, counties, towns, and cities within provinces and centrally-administered cities.

The People's Committee of the province, based on the actual situation in the locality, shall specifically define the border land areas between districts, counties, and towns within the province or city to be appropriate.

Article 13. Valuation of specific land types in the locality

1. When valuing and adjusting the prices of specific land types in the locality, the People's Committee of the province must:

a) Implement zoning, land grading, street classification, and land position determination as stipulated in Articles 8, 9, 10, and 11 of this Decree.

b) Base on the principles for determining land prices as prescribed in Article 56 of the Land Law; methods for determining land prices and price ranges for various land types as prescribed in Articles 4, 5, and 6; specific valuation methods for each type of land as prescribed in this Decree, and actual market transfer prices of land use rights under normal conditions to establish specific land price lists at the locality level, submit them to the People's Council at the same level for comments before making a decision.

2. Specific valuation methods for each type of land

When valuing a particular type of land, the price range set by the Government for that type of land shall be applied. Specific valuation methods for each type of land according to the price range are as follows:

a) For annual crop land, perennial crop land, aquaculture land, production forest land, protective forest land, special-use forest land, and other agricultural land:

Land grade 1 in each region (delta, midland, mountainous) and each type of land with the best soil quality, location, topography, climate, weather, and irrigation conditions corresponds to the highest price, subsequent grades from grade 2 onwards with poorer conditions correspond to lower prices.

b) For salt-making land: land in position number 1 has the highest price, subsequent positions from position number 2 onwards correspond to lower prices.

c) For residential land, non-agricultural production and business land, and other non-agricultural land in rural areas:

Land in zone 1 has the highest price, subsequent zones from zone 2 onwards correspond to lower prices.

Within each land zone, land prices are determined by position. Land in position number 1 within zone 1 has the highest price in zone 1, subsequent positions from position number 2 onwards correspond to lower prices. Similarly, land in position number 1 within zone 2 has the highest price in zone 2, subsequent positions from position number 2 onwards correspond to lower prices; land in position number 1 within zone 3 has the highest price in zone 3, subsequent positions from position number 2 onwards correspond to lower prices.

d) For garden and pond land intermixed within the residential area in rural areas but not granted a certificate of residential land use by the competent authority, the land price shall be set at the highest level for perennial crop land prices in the same region; simultaneously, based on actual conditions in the locality, the provincial People's Committee may stipulate higher land prices, but such maximum levels shall not exceed twice the highest level for perennial crop land prices in the same region as prescribed by the provincial People's Committee.

đ) For residential land, non-agricultural production and business land, and other non-agricultural lands in urban areas:

In each type of urban area, land prices are determined according to the type of street.

Residential land on streets of type 1 located in the city center and commercial service centers has the highest price. Residential land on subsequent street types from type 2 onwards corresponds to progressively lower prices.

Within each street type, land prices are determined by position. Land at position 1 on streets of type I has the highest price for that street type; subsequent positions from number 2 onwards correspond to progressively lower prices. Similarly, land at position 1 on subsequent street types has the highest price for each respective street type; subsequent positions correspond to progressively lower prices for each respective street type.

Where a street type includes multiple sections with different profit potential, actual land transfer prices, and varying degrees of infrastructure completion, each section is classified into the corresponding street type for specific pricing, as decided by the provincial People's Committee.

e) For agricultural land intermixed within urban areas not planned as residential land or other non-agricultural land, the land price shall be set at the highest level for perennial crop land prices in the same region; simultaneously, based on actual conditions in the locality, the provincial People's Committee may stipulate higher land prices, but such maximum levels shall not exceed twice the highest level for perennial crop land prices in the same region as prescribed by the provincial People's Committee.

g) For residential land in rural areas adjacent to main traffic routes (national highways, provincial roads), traffic junctions, commercial zones, tourist areas, industrial zones, the provincial People's Committee shall base its determination of land prices at these locations on actual conditions in the locality, ensuring they do not exceed three times the maximum price for residential land in rural areas as prescribed by the Government under Clause 1, Article 6 of this Decree.

Article 14. Land prices in border areas

1. Land prices in border areas between provinces and centrally governed cities.

a) When determining land prices in border areas between provinces and centrally governed cities, the People's Committees of the provinces with border land must agree among themselves on land prices and plans to adjust land prices in border areas based on the provisions of Clause 1, Article 12 of this Decree, adhering to the principle:

- Border land belonging to a certain land type shall be priced according to the framework price set by the Government for that land type.

- For land in border areas between provinces and centrally governed cities as specified in Clause 1, Article 12 of this Decree, if natural conditions, infrastructure, current usage purposes, and planned usage purposes are the same, then the prices shall be the same.

In special cases, prices may differ, but the maximum difference ratio shall not exceed 20%.

b) If the provinces with border land as specified in Point a, Clause 1 of this Article cannot agree on setting prices, they shall report to the Prime Minister for a decision.

2. Land prices in border areas between districts, counties, towns, and cities within provinces and centrally governed cities.

The provincial People's Committee shall base its determination of specific land prices in border areas on the provisions of Clause 2, Article 12 and apply the principles for pricing land in border areas as specified in Point a, Clause 1 of this Article to ensure appropriate pricing.

Article 15. Adjusting specific land types' prices at local levels

The provincial People's Committee must adjust land prices in the following cases:

1. When the actual market price for transferring land use rights of certain types of land and locations in the locality under normal conditions fluctuates continuously for 60 days or more, causing significant price differences: a decrease of 10% or more compared to the price decided by the provincial People's Committee shall result in a downward adjustment; if it increases by 20% or more compared to the price decided by the provincial People's Committee, then the price will be adjusted upwards but the adjustment ratio shall not exceed 20% of the maximum price level specified in Clause 2, Article 6 of this Decree.

2. When the competent authority adjusts the planning and land use plans, changes the purpose of land use, changes the land category, type of city, type of street, and location, the land price in the affected area must be readjusted according to the appropriate land price framework but shall not exceed the price level stipulated in Clause 1 of this Article.

3. The land price framework of the Government has been adjusted.

Chapter IV

IMPLEMENTATION

Article 16. Implementation

1. The Ministry of Finance, within its authority, is responsible for guiding the implementation, inspecting the organization and execution of this Decree, resolving price-related issues arising from localities' requests within its authority; organizing a network for land price statistics, investigating and monitoring land prices nationwide; taking the lead in building and submitting to the Government for adjustments to the land price framework; organizing training on land valuation skills.

2. Ministries, sectors, and organizations, agencies using land have the responsibility to direct and organize inspections and audits of land price implementation as prescribed in this Decree.

3. The provincial People's Committee is responsible for:

a) Setting land prices and promptly adjusting them in accordance with the provisions of this Decree. Announcing the public land prices in the locality on January 1st each year and when there are price adjustments, organizing the implementation and inspection of land prices in the locality.

In necessary cases when considering decisions on land prices in the locality, the provincial People's Committee may hire units with appraisal functions, land price consulting agencies to survey and investigate land transfer prices, provide advice on establishing specific land prices in the locality.

b) Not delegating or authorizing departments, district, county, town, and provincial city People's Committees to set land prices.

c) Inspecting, handling, and resolving specific issues related to land prices within their jurisdiction in the locality.

d) Regularly monitoring fluctuations in land transfer prices, organizing land price statistics.

đ) Reporting to the Ministry of Finance the situation of land transfer prices in the locality every six months; the deadline for submitting reports is before June 15th and December 15th each year.

e) Allocating a portion of the local budget to conduct investigations and surveys of land transfer prices, hiring consultants to establish land price lists and appraise local land types.

Article 17. Implementation Provisions

1. This Decree takes effect 15 days after being published in the Official Gazette and replaces Decree No. 87/CP dated August 17, 1994 of the Government on the land price framework, Decision No. 302/TTg dated May 13, 1996 of the Prime Minister on adjusting the coefficient (k) in the land price framework, and Decree No. 17/1998/NĐ-CP dated March 21, 1998 of the Government on amending and supplementing Clause 2, Article 4 of Decree No. 87/CP dated August 17, 1994 on the land price framework.

2. Based on this Decree, the provincial People's Committee shall issue specific land prices to be publicly announced and implemented from January 1, 2005.

3. Ministers, heads of ministerial-level agencies, heads of agencies under the Government, Chairmen of provincial and centrally-administered city People's Committees are responsible for implementing this Decree./.